One Media iP Group Plc - Half-year Report

One Media iP Group Plc

("One Media", the "Group” or the “Company")

UNAUDITED INTERIM RESULTS

One Media iP Group Plc (AIM: OMIP), a digital media content provider that exploits intellectual property rights around music and video, is pleased to announce its half year results for the period ended 30 April 2017.

Highlights:

·      Turnover of £1,147,131 (2016: £1,055,693); (+ 8.7%)

·      Profit before tax of £148,781 (2016: £118,721); (+25.3%)

·      EBITDA of £264,935 (2016: £224,143); (+18.2%)

·      Cash balances of £228,628 at 30 April 2017 (£335,664 at 31 October 2016).

Michael Infante, Chairman and CEO, commented: “I am pleased to report a steadying of the ship and early indications that we are beginning to see our repositioned business model starting to benefit from the effect of ‘digital audio streaming’ gaining traction over ‘digital audio downloads’. I have previously explained the seismic shift in our audio monetisation model and its consequential degradation on our revenues over the last two years. The Group has been very vocal and transparent on this and I have gone to lengths to explain this in my previous Chairman’s statements. The indication is that we are at an inflection point and that growth is back on the horizon. Combine this with our new initiatives in TCAT and Men & Motors, together with our core business and we are beginning to demonstrate early momentum for our growth strategy. We predicted that Q1 2017 would be the beginning of the ‘streaming monetisation’ insurgency against ‘downloads’ and that we would begin to feel the benefit of those effects moving forward. I continue to have confidence in our market approach and our new music, video and technical related initiatives are well positioned to retain our mission of ‘IP’ exploitation, growth and continued profit.”

For further information, please contact:

One Media iP Group Plc
Chairman and Chief Executive Michael Infante	Tel: [phone]
One Media iP Group Plc Alice Dyson-Jones Communications	Tel [phone]
Cairn Financial Advisers LLP                   Nominated Adviser
Liam Murray / Jo Turner	Tel: [phone]
Panmure Gordon (UK) Limited Broker Karri Vuori /James Stearns	Tel: [phone]

CHAIRMAN & CHIEF EXECUTIVE’S STATEMENT

The global political upheavals serve as a reminder that change occurs faster than markets can sometimes anticipate. With keen direction and attention to detail the Group has taken the challenge of meeting its market expectation. The team has focussed on embracing the audio shift and have used our expertise to accelerate the changeover. We can’t direct consumers to work within the timescale we set for the balance to shift in monetisation of our audio consumption, but what we can do is ensure that all our content, where possible, is being offered on every new and existing streaming store (such as Apple Music, Spotify, Amazon, Deezer and Google Play) as they come to market with their expanded streaming services.

Industry revenues in the UK grew by 1.5% to £926m (source BPI Official Charts Company) to December 2016. Trade revenues for recorded music are anticipated to reach a growth rate of 5.1% and our own figures would appear to support this swing back to growth. The increase in streaming has attracted many negative headlines over the last few years. We have always been a supporter of the streaming model, despite its initial adverse effect on our revenues and believe it must be embraced not resisted (in the words of the Borg “Resistance is Futile”) One Media however deals in the world-wide market and according to the BPI revenues have grown by 5.9% globally. Global revenues revealed by the IFPI reports that by December 2016 there were 112m users of paid music streaming subscriptions. The UK remained at third place in global table behind the USA and Japan.  The USA (One Media’s strongest market) has grown by 7.6%. The total world market in music is now valued at $15.6bn (US Dollars) up 5.9% from the previous year. Global revenue data, as of December 2016, confirmed digital sales (including downloading and streaming) were 50% of the total market at USD$7.835 bn. Physical Sales (CDs & Vinyl formats included) 34% at $5.3278bn. Synchronisation sales (music for advertising film & TV 2% at $0.3134bn, Performance Rights (Concerts, Radio & TV play ) 14% at £$2.1938  (source BPI/IFPI).

We have taken a consolidative view of the market whilst the buying trends shift. We are preserving our resources regarding content acquisition until the merry-go-round settles. I believe there will be some bargains on the horizon. We are underpinning existing contracts by extending existing rights and ensuring that our library of rights remains robust.

On 25 January 2017 we announced that we had renewed the exclusive rights to the MD Production music catalogue for a recoupable advance of $18,000 (eighteen thousand US Dollars). The MD catalogue comprises over 1,000 original recordings from the 1960s to the 1980s. With performances from artists such as Don Fardon, The Cockerel Chorus, Dando Shaft, Gill Scott-Heron, Greyhound, Roy Harper, Johnny Kidd & the Pirates, Kenny and Python Lee Jackson to name just a few. The tracks have been marketed exclusively by One Media since 2007 on a royalty-sharing basis. MD Productions has been a long-term music provider and has received three advances and on-going royalties from One Media throughout the term.  One Media is pleased to report that it has always fully recouped its advances throughout the relationship.

On 30 January 2017 we started work on reorganising the Group’s websites. Five new websites were created demonstrating the Group’s expanded activities. Firstly we have the new site; One Media iP Group Plc (http://www.omip.co.uk/). Here you will find all the investor relation information and dedicated summaries of the Group’s subsidiaries. The day-to-day activities, artist information and social media activities of our audio and video businesses is now housed under http://www.onemediaip.com/. Our Technical Copyright Analysis Tool (TCAT) is at (http://www.tcat.media/). Here you will find our informational video on the ‘Software as a Service’ (SaaS) technology. Men & Motors can be found on (www.menandmotors.com) a new and exciting style for this site showing the links to the archive of over 3400 shows and information on our initiative for a new format of TV show still being presented to various broadcasters.  Point Classics, our classical collection of over 3000 recordings (http://www.pointclassics.com/) is now the new home for this collection. Music supervisors use this site to sort, search and compile classical recordings for film and TV. We are pleased to report that all of the work in creating the new sites was completed on time and within budget.

It is the Group’s intention to expand the exploitation for the corporate brands that it now owns and to more clearly define their individuality trade-wise in the coming year. Men & Motors by way of example has already been registered (albeit dormant), as a stand-alone subsidiary company in preparation for broadcast and trading demand. The same applies for TCAT and the Group has registered TCAT Ltd should this be required in the future.

On 1 February 2017 we announced that we had moved our banking services to Coutts & Co ("Coutts") of 440 Strand, London. We commenced the orderly handover from Barclays to Coutts during February 2017. The Group confirmed at the time that it has no debt and is cash resourced. Coutts experience within media and content with many focussed services and seminars should prove invaluable to the Group with its expansion programme into varying media and technology activities.

In two statements on 20 February 2017 and on 12 April 2017, the Group announced that it had concluded its copyright complaint and litigation in the Middle District of Tennessee with HHO Licensing Ltd, Henry Hadaway Organisation Ltd and Henry Hadaway personally by way of an amicable resolution.

Post the half year end on 30 April 2017 the Group announced that One Media signed an exclusive exploitation deal with Getty Images for 'clips' from the Group’s moving image library rights. The deal will involve One Media supplying ‘clips’ from its growing video content library to Getty Images for representation and exploitation to Getty’s worldwide client base for multiple use in documentaries, advertising and all moving image usages. Getty Images is one of the most esteemed sources of visual content throughout the world, with over 200 million assets available through its industry-leading sites www.gettyimages.com and www.istock.com. The distribution deal will see the Group create thousands of clips from its archive to be made available to Getty Image’s clients on their web based platforms. The Group’s video archive has grown by acquisition over that last few years and we are now able to further exploit the content via a ‘clipping’ service and to supply the world leader in image hire. The Group’s Creative Technicians are already trained and equipped to perform this function in-house and have been successful in building billions of views with the Company’s content for sites like You Tube. Content from Men & Motors, Alien Autopsy and the HiBrow film catalogue together with our cleared music video content will spearhead the service.

On 25 May 2017 we announced that we had signed our first major music distributor to utilise the services of the Group’s Technical Copyright Analysis Tool (“TCAT”). The global music distributor will be using the TCAT services from June 2017 to monitor its weekly release schedules, monitor music conflicts and potential copyright infringements. Following two years of development the deal will see the commercialisation of TCAT on an annual contract basis. Confidentiality clauses in the agreement prevents us from disclosing the identity of our client at this time and any of the commercial terms but the Group is very excited by having TCAT deployed as a technical resource to a major record distributor.  Whilst the revenues generated from this initial contract will be modest, it is a significant development for the Group as it validates and proves the technology and demonstrates its need in the market place.

Results

The Group has continued to manage its financial position over the 6 month period to 30 April 2017 with profitable operations and no debt.

Group consolidated turnover was £1,147,131 for the 6 months ended 30 April 2017 (2016: £1,055,693).

Profit before tax of £148,781 (2016: £118,721).

Cash balances at 30 April 2017 of £228,628 (2016: £335,664).

During the period, the Company has not issued new shares as consideration for acquisitions and has used existing cash resources as consideration.

Litigation

The company has been informed of a pending action in the Southern District of Florida Court USA for a claim by Kemar McGreor (KM) against Phoenix Music International Ltd (PMI), Orchard Enterprises Ltd (OE) and One Media Ip Group PLC (OMIP), for an alleged infringement of copyrights supplied by PMI to both OE and OMIP. Phoenix Music International (a British company) entered into a license agreement with Kemar McGreor for the licensing of certain music rights on or about the 9th May 2011. PMI then entered into a deal with OE and OMIP to act as distributors for the licensed content. The case is centered on whether PMI had the rights to allow OE and OMIP to distribute the licensed content. PMI have informed both OE and OMIP that they will robustly defend this action. OMIP has a full indemnity from PMI on its distribution agreement with PMI. PMI are meeting all the costs of the defence for OMIP and any costs or settlements in the final outcome.

A representative from the Group will attend a mediation meeting on the 9th October 2017 in Florida and will report the outcome of said mediation. A trial date has been set for December 9 2017 failing mediation and/or settlement between the parties.

Dividend

The Group continues to review the dividend policy in line with its cash resources and requirements. No dividend is announced at this time.

News, Content Exploitation and Acquisitions

Understanding and underpinning where our revenues are generated and our resources are best spent has been a priority. Maintaining cost controls, motivating new and existing initiatives and resourcing the TCAT development for exploitation is a continued project. We are recruiting more technical staff in the second half and will build our ability not only to expect more from TCAT but also review our internal operation in line with the skill set required. We remain vigilant on content acquisition and as always will invest where the Group can identify good opportunities.

Outlook

I have been transparent throughout the last two years regarding the challenging times that the Group has faced. We still have concepts to prove. We still have internal changes to make to meet the new demands as we advance into becoming a more fully rounded digital group. It is an exciting time and I know that we can meet those demands. We are here for the long run and continue to invest our time, effort and ingenuity to make One Media a company of substance.

I would like to thank our team both in-house, contracted and my co-directors. I would especially like to express my thanks to our newly appointed Company Secretary and Head of Finance, Steven Gunning for so ably embracing the Group’s financial obligations and day to day running of our accounts systems.

MICHAEL INFANTE
CHAIRMAN AND CHIEF EXECUTIVE
27 June 2017

Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 30 April 2017

		Unaudited	Unaudited	Audited
		6 months ended  30 April 2017	6 months ended  30 April 2016	12 months ended 31 October 2016
		£	£	£
Revenue		1,147,131	1,055,693	2,045,652
Cost of sales		(628,093)	(601,080)	(1,139,951)
		_________	_________	_________
Gross profit		519,038	454,613	905,701
Administrative expenses		(370,352)	(336,083)	(876,742)
		_________	_________	_________
Operating profit		148,686	118,530	28,959
Finance income		95	191	1,060
		_________	_________	_________
Profit on ordinary activities before taxation		148,781	118,721	30,019
Tax credit / (expense)		(16,573)	(23,744)	32,852
		_________	_________	_________
Profit for period attributable to equity shareholders and total comprehensive income for the year		132,208	94,977	62,871
		=========	=========	=========
Basic adjusted earnings per share		0.19p	0.13p	0.09p
		=========	=========	=========

Unaudited Consolidated Statement of Financial Position
As at 30 April 2017

		Unaudited	Unaudited	Audited
		30 April 2017	30 April 2016	31 October 2016
		£	£	£
Assets
Non-current assets
Intangible assets		3,394,925	3,338,237	3,394,134
Property, plant and equipment		5,230	7,787	6,452
		_________	_________	_________
		3,400,155	3,346,024	3,400,586
		_________	_________	_________
Current assets
Trade and other receivables		447,690	478,174	463,574
Cash and cash equivalents		228,628	549,888	335,664
		_________	_________	_________
Total current assets		676,318	1,028,062	799,238
		_________	_________	_________
Total assets		4,076,473	4,374,086	4,199,824
		=========	=========	=========
Liabilities
Current liabilities
Trade and other payables		468,318	869,999	756,988
Deferred tax		22,532	-	5,960
		_________	_________	_________
		_________	_________	_________
Total liabilities		490,850	869,999	762,948
		_________	_________	_________
Equity
Called up share capital		355,268	355,268	355,268
Share redemption reserve		239,546	239,546	239,546
Share premium account		1,457,645	1,457,645	1,457,645
Share based payment reserve		90,979	59,097	74,440
Retained earnings		1,442,185	1,392,531	1,309,977
		_________	_________	_________
Total equity		3,585,623	3,504,087	3,436,876
		_________	_________	_________
		_________	_________	_________
Total equity and liabilities		4,076,473	4,374,086	4,199,824
		=========	=========	=========

Unaudited Consolidated Statement of Changes in Equity
For the six months ended 30 April 2017

	Share capital	Share redemption reserve	Share premium	Share based payment reserve	Retained earnings	Total equity
	£	£	£	£	£	£
At 1 November 2015	355,268	239,546	1,457,645	43,497	1,348,002	3,443,958
Profit for the six months to 30 April 2016	-	-	-	-	94,977	94,977
Share option charge	-	-	-	15,600	-	15,600
Dividends	-	-	-	-	(50,448)	(50,448)
	________	_________	_________	_________	_________	_________
At 30 April 2016	355,268	239,546	1,457,645	59,097	1,392,531	3,504,087
Profit for the six months to  31 October 2016	-	-	-	-	(32,106)	(32,106)
Share based payment charge	-	-	-	15,343	-	15,343
Dividends	-	-	-	-	(50,448)	(50,448)
	________	_________	_________	_________	_________	_________
At 31 October 2016	355,268	239,546	1,457,645	74,440	1,309,977	3,436,876
Profit for the six months to 30 April 2017	-	-	-	-	132,208	132,208
Share option charge	-	-	-	16,539	-	16,539
	________	_________	_________	_________	_________	_________
Balance at 30 April 2017	355,268	239,546	1,457,645	90,979	1,442,185	3,585,623
	========	=========	=========	=========	=========	=========

There has been no issue of shares in the six months ended 30 April 2017.

Unaudited Consolidated Cash Flow Statement
For the six months ended 30 April 2017

	Unaudited	Unaudited	Audited
	6 months  ended     30 April 2017	6 months  ended     30 April 2016	12 months ended 31 October 2016
	£	£	£
Cash flows from operating activities
Profit before taxation	148,781	118,721	30,019
Amortisation	112,998	103,633	209,365
Depreciation	1,222	1,980	4,002
Share based payments	16,539	15,600	30,943
Finance income	(95)	(191)	(1,060)
(Increase)/decrease in receivables	15,884	(37,922)	(23,320)
(Decrease)/increase in payables	(288,670)	(297,628)	(290,186)
Corporation tax paid	-	-	(57,900)
	_________	_________	_________
Net cash inflow from operating activities	6,659	(95,807)	(98,137)
	_________	_________	_________
Cash flows from investing activities
Investment in copyrights	(113,790)	(118,547)	(280,176)
Investment in fixed assets	-	(1,750)	(2,436)
Finance income	95	191	1,060
	_________	_________	_________
Net cash used in investing activities	(113,695)	(120,106)	(281,552)
	_________	_________	_________
Cash flow from financing activities
Dividend paid	-	(50,448)	(100,896)
	_________	_________	_________
Net cash outflow from financing activities	-	(50,448)	(100,896)
	_________	_________	_________
Net change in cash and cash equivalents	(107,036)	(266,361)	(480,585)
Cash at the beginning of the period	335,664	816,249	816,249
	_________	_________	_________
Cash at end of the period	228,628	549,888	335,664
	=========	=========	=========

Notes to the Interim Report

For the six months ended 30 April 2017

1.   Nature of operations and general information

One Media iP Group Plc and its subsidiaries’ (“the Group”) principal activities are the acquisition and licensing of audio-visual intellectual copyrights and publishing for distribution through the digital medium and to a lesser extent through traditional media outlets.

One Media iP Group Plc is the Group’s ultimate parent company incorporated under the Companies Act in England and Wales. The address of One Media iP Group Plc registered office is 623 East Props Building, Goldfinger Avenue, Pinewood Road, Iver Heath, Buckinghamshire, SL0 0NH.

The financial information set out in this Interim Report does not constitute statutory accounts. The Group’s statutory financial statements for the year ended 31 October 2016 are available from the Group’s website. The auditor’s report on those financial statements was unqualified.

2.   Accounting Policies

Basis of Preparation

These interim consolidated financial statements are for the six months ended 30 April 2017. They have been prepared following the recognition and measurement principles of IFRS. They do not include all the information required for full annual statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 October 2016.

This unaudited interim statement has not been subject to a review by the Group’s auditors James Cowper Kreston.

Comparatives

The comparative periods represent the unaudited results for the six months period ended 30 April 2017 and the audited twelve months figures for the year ended 31 October 2016.

3.   Earnings per share

The calculation of the earnings per share is based on the profit for the financial period divided by the weighted average number of shares in issue during the period.

	Unaudited	Unaudited	Audited
Basic earnings per share	6 months ended 30 April 2017	6 months ended 30 April 2016	12 months ended 31 October 2016
Profit for period attributable to equity shareholders	132,208	94,977	62,871
Weighted average number of shares in issue at period end	71,053,698	71,053,698	71,053,698
	_________	_________	_________
Basic earnings per share	0.19p	0.13p	0.09p
	=========	=========	=========

The diluted earnings per share would be lower than the basic profit per share as the exercise of warrants and options would be dilutive.

4.   Share capital

	Unaudited	Unaudited	Audited
	30 April 2017	30 April 2016	31 October 2016
Group and company	£	£	£
Authorised:
200,000,000 ordinary shares of 0.5p each	1,000,000	1,000,000	1,000,000
	==========	==========	==========
Issued:
Ordinary shares of 0.5p each
71,053,698 ordinary shares of 0.5p each	355,268	355,268	355,268
	==========	==========	==========

5.   Interim statement

Copies of this statement are available from Group's registered Office at:

623 East Props Building, Goldfinger Avenue, Pinewood Road, Iver Heath, Buckinghamshire, SL0 0NH.

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